Medical Jet, S.A. v. Signature Flight Support-Palm Beach, Inc.
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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
July Term 2006
MEDICAL JET, S.A.,
Appellant,
v.
SIGNATURE FLIGHT SUPPORT - PALM BEACH, INC.,
Appellee.
No. 4D05-1760
ON MOTION FOR REHEARING
[November 15, 2006]
GROSS, J.
We grant appellee, Signature Flight Support-Palm Beach, Inc.’s, motion
for rehearing, withdraw the original panel opinion, and affirm the
judgment. Under well established principles of law, the statute of
limitations barred appellant, Medical Jet, S.A.’s, action for breach of
contract concerning the inspection and repair of its aircraft.
Medical Jet owned an aircraft registered in Argentina. In 1998, Medical
Jet entered into an agreement with appellee, Signature Flight SupportPalm Beach, Inc., providing that Signature Flight would inspect and
repair the aircraft.
Medical Jet contends that Signature Flight
represented that it had current certification from the Argentine aircraft
regulatory authority. Signature Flight performed the work and returned
the aircraft to Medical Jet on April 23, 1998.
According to Medical Jet, the Argentine authorities grounded the
aircraft on May 14, 1999 because the plane failed to pass its annual
inspection; the reason for that failure was that Signature Flight lacked a
current certification number from the Argentine regulatory body.
In 1999, Medical Jet sued Signature Flight for breach of contract. That
action was dismissed for failure to prosecute in July, 2003. Medical Jet
filed the complaint here at issue on August 27, 2003. The circuit court
granted a motion for judgment on the pleadings, ruling that the five-year
statute of limitations of section 95.11(2)(b), Florida Statutes (2004),
barred the cause of action.
The statute of limitations for a contract founded on a written
instrument is five years. See § 95.11(2)(b), Fla. Stat. (2004). “A cause of
action accrues [for statute of limitations purposes] when the last element
constituting the cause of action occurs.” § 95.031(1), Fla. Stat. (2004).
Signature Flight breached the contract when it performed the contract
work without the proper certificate from the Argentine government. If the
cause of action accrued at the time of the breach, then accrual could
have occurred no later than April 23, 1998, the date that Signature
Flight returned the plane to Medical Jet. If this is correct, then the
August 27, 2003 lawsuit fell outside the five-year statute of limitations.
The dissent believes that the cause of action did not accrue until May
14, 1999, when the Argentine regulatory authority grounded Medical
Jet’s aircraft. The basis of that belief is that Medical Jet suffered no
actual damages until the plane was grounded on May 14, 1999, and that
such damage was the last element giving rise to the cause of action. See
§ 95.031(1), Fla. Stat. (2004).
For a breach of contract action, it is well established that a statute of
limitations “runs from the time of the breach, although no damage
occurs until later.” 18 Richard A. Lord, Williston on Contracts § 2021A
(3d ed. 1978). Florida has followed this general rule that a cause of
action for breach of contract accrues at the time of the breach, “not from
the time when consequential damages result or become ascertained.”
Fradley v. County of Dade, 187 So. 2d 48, 49 (Fla. 3d DCA 1966); see
Meyer v. Roth, 189 So. 2d 515 (Fla. 3d DCA 1966). This court cited
Fradley and Meyer with approval in Dovenmuehle, Inc. v. Lawyers Title
Ins. Corp., 478 So. 2d 423, 424 (Fla. 4th DCA 1985).
The general rule is consistent with the policy behind the statute of
limitations, which is to “prevent unreasonable delay in the enforcement
of legal rights” and “to protect against the risk of injustice.” Hawkins v.
Barnes, 661 So. 2d 1271, 1272 (Fla. 5th DCA 1995). The rule provides
an “objective, reliable, predictable and relatively definitive” rule that has
“long governed this aspect of commercial repose of disputes.” ElyCruikshank Co., Inc. v. Bank of Montreal, 615 N.E.2d 985, 988 (N.Y.
1993). This is not one of those exceptional cases where the general rule
does not apply. See 18 Williston, at § 2026A. The dissent’s approach to
the “accrual” concept in breach of contract cases seeks to introduce the
delayed discovery doctrine into Florida contract law. The supreme court
rejected an expansion of the delayed discovery doctrine in Davis v.
Monahan, 832 So. 2d 708 (Fla. 2002).
The general rule is consistent with the wording of section 95.031(1) that
ties “accrual” to the occurrence of the last element giving rise to a cause
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of action. Since at least nominal damages are sustained at the time of a
breach of contract, all of the elements necessary to maintain a lawsuit
and obtain relief in court are present at the time of the breach. See
Abbott Lab., Inc. v. Gen. Elec. Capital, 765 So. 2d 737, 740 (Fla. 5th DCA
2000); Ely-Cruikshank Co., 615 N.E.2d at 986-87; T & N PLC v. Fred S.
James & Co. of New York, Inc., 29 F.3d 57, 59-60 (2d Cir. 1994) (applying
New York law).
Courts in other jurisdictions recognize that the statute of limitations in
a breach of contract action accrues at the time of the breach, even
though the actual damage does not occur until later. See Howarth v.
First Nat’l Bank of Anchorage, 540 P.2d 486, 490-91 (Alaska
1975)(stating that the statute of limitations usually “begins to run in
contract causes of action” at “the time of the breach of the agreement,
rather than the time that actual damages are sustained as a
consequence of the breach”); First Trust Nat’l Ass’n v. First Nat’l Bank of
Commerce, 220 F.3d 331 (5th Cir. 2000); Cavanaugh v. City of Omaha,
580 N.W.2d 541, 544 (Neb. 1998) (holding that a “cause of action in
contract accrues at the time of the breach or failure to do the thing that
is the subject of the agreement,” even though “the plaintiff may be
ignorant of the existence of the cause of action”); State v. Holland Plastics
Co., 331 N.W.2d 320, 325 (Wis. 1983).
A case similar to this one is ABB Industrial Systems, Inc. v. Prime
Technology, Inc., 120 F.3d 351 (2d Cir. 1997), because it involves a
breach of contract where a plaintiff incurred damages years after the
breach as a result of action required by a governmental agency. In that
case, ABB Industrial purchased real property on September 11, 1985;
the vendor warranted that “the property was in compliance with all
environmental laws.” Id. at 354. After 1989, ABB learned that the
property was contaminated by hazardous chemicals, in violation of two
federal environmental statutes. In 1992, ABB began the extensive
cleanup of the site required by the environmental laws.
ABB filed suit against the vendor for breach of contract on September
18, 1991, six years and one week after it closed on the property. Id. at
360. The applicable statute of limitations was six years. Id. The second
circuit rejected the argument that the statute of limitations began to run
at some point after the contamination was discovered, when ABB
incurred damages to clean up the property; the court held that the
“contract was breached, if at all, on the day it was executed,” so that the
statute began to run on September 11, 1985. Id.
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Other cases similarly hold that a breach of contract action accrues at
the time of the breach, not when later events create the bulk of a
plaintiff’s damages.
For example, in Nardo v. Guido DeAscanis & Sons, Inc., 254 A.2d 254
(Del. Sup. Ct. 1969), a building contractor breached a contract in 1957
by improperly placing roof rafters.
The buyers noticed dampness
problems in 1959, but did not realize that the condition arose from the
placement of the rafters.
After attempts to fix other dampness
conditions, the buyers became aware of the rafters installation problem
in 1965 or early 1966. Id. at 255. The buyers filed suit against the
contractor on July 3, 1967, claiming breach of contract and negligence.
The Delaware court held that the cause of action for breach of contract
accrued at the time of the breach, “in 1957 when the roof rafters were
improperly installed,” so that the claim was barred by the statute of
limitations. Id. at 256; see also Kennedy v. Johns-Manville Sales Corp.,
62 A.2d 771 (Conn. 1948) (holding that where contractor defectively
installed wall insulation in 1935, but the injuries did not “become
apparent until December, 1945,” the cause of action for breach of
contract accrued in 1935, so that the action was barred by the statute of
limitations).
Similarly, Johnson v. Crisler, 125 So. 724 (Miss. 1930), involved a
breach of contract action against an “abstractor of titles to land” who
“made a false certificate to such abstract of title” on February 2, 1925
that certain property was free of liens. Later, it appeared that the
property was subject to a special tax assessment. The Supreme Court of
Mississippi held that the cause of action accrued at the time of the
breach, February 2, 1925, not the later time when the damages from the
breach occurred, i.e., when an assessment was applied to the property.
Id. at 724-25.
For these reasons, we affirm the judgment of the circuit court.
IMPERATO, CYNTHIA G., Associate Judge, concurs.
MAY, J., dissents with opinion.
MAY, J., dissenting.
I respectfully dissent. The majority has charted a new course from
the original decision. I decline to follow.
The statute of limitations defense in this case caused three legal
theories to be addressed: (1) the statute of limitations in breach of
contract actions; (2) the accrual of a cause of action; and (3) the
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inapplicability of the delayed discovery doctrine.1 In the original opinion,
we relied on well-established law on the accrual of a cause of action. In
its motion for rehearing, the defendant suggests that this court’s opinion
conflicted with other cases. For the reasons expressed below, I disagree
that our original opinion was in conflict with those cases and would
adhere to our original decision to reverse.
The majority accurately sets out the relevant facts and those aspects
of the law that support its decision. It chooses, however, to overlook the
elephant in the room -- the case law’s failure to reconcile the law on the
accrual of a cause of action and the statute of limitations in breach of
contract actions. The problem is that each case relied on by the
defendant has independently addressed only one of the issues. None
have attempted to reconcile the three theories or explain how they
interrelate. I simply choose to call attention to the elephant.
I reject the majority’s suggestion that by confronting the issue, I
somehow introduce the delayed discovery doctrine into Florida contract
law. I agree that the delayed discovery doctrine does not apply to breach
of contract actions. See Davis v. Monahan, 832 So. 2d 708 (Fla. 2002).
That is not what this case is about. It is not about Medical Jet’s late
discovery of its cause of action, rather this case is about the fact that
damages did not arise, and Medical Jet’s cause of action did not accrue,
until a year after the breach occurred.
A close review of the cases relied upon by the majority and the
defendant reveal why they do not dictate a reversal. In Dovenmuehle, Inc.
v. Lawyers Title Insurance Corp., 478 So. 2d 423 (Fla. 4th DCA 1985),
this court found that a cause of action accrued when the damage
occurred and the plaintiff knew or should have known of the breach.
Because the damage occurred at the same time as the breach, the issue
before us in this case was not raised in Dovenmuehle.
State Farm Mutual Automobile Insurance Co. v. Lee, 678 So. 2d 818
(Fla. 1996), addressed the accrual of a cause of action for breach of an
insurance policy for PIP benefits. The supreme court relied upon specific
statutory language to reach its conclusion. But, just as in Dovenmeuhle,
the damages had occurred at the time of the breach unlike the facts in
this case.
The plaintiff's main argument on appeal was that the trial court erred in
granting the defendant’s motion for judgment on the pleadings, having
previously denied a motion to dismiss on the same basis. In its answer brief,
the defendant argued the validity of the trial court’s decision -- the claim was
time barred because the breach occurred and the statute of limitations began to
run upon the delivery date of the airplane.
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It is Abbott Laboratories, Inc. v. General Electric Capital, 765 So. 2d
737 (Fla. 5th DCA 2000), that appears at first blush to be most
problematic. Whittled down to its essence, the defendant in Abbott
raised a statute of limitations defense in a contract dispute involving a
third party. The plaintiff argued that it was not damaged until after the
breach by the third party. Relying on this court’s opinion in Muroff v.
Dill, 386 So. 2d 1281 (Fla. 4th DCA 1980), the Fifth District held that the
plaintiff’s injury occurred simultaneously with the defendant’s breach
because nominal damages were sustained at that time.
Muroff, however, had nothing to do with the statute of limitations in
breach of contract actions. The Muroff court addressed a plaintiff’s
failure to prove the correct measure of damages in a breach of contract
action. There, we stated that “‘[n]ominal damages may be awarded when
the breach of an agreement or invasion of a right is established since the
law infers some damage to the injured party. . . .’” Id. at 1284 (quoting
Beverage Canners, Inc. v. Cott Corp., 372 So. 2d 954, 956 (Fla. 3d DCA
1979)). Thus, the fiction of imputing nominal damages was created to
substitute for a lack of proof of damages, not to somehow prematurely
activate the statute of limitations.
The defendant’s reliance on language found in Fradley v. County of
Dade, 187 So. 2d 48 (Fla. 3d DCA 1966) (“the cause of action accrues
from the time of the breach or neglect, not from the time when
consequential damages result or become ascertained”), while supportive,
is dicta. The actual holding in Fradley was that the plaintiff’s failure to
comply with the notice of claim statute in a medical malpractice action
barred the claim.
The common theme running through these cases is that when the
breach is evident, nominal damages will be presumed, and the cause of
action will accrue at the time of the breach. However, not one of these
cases has tackled how this fiction of presumed damages exists
simultaneously when the breach is not evident. More importantly, they
fail to address the statutory requirement that “[a] cause of action accrues
when the last element constituting the cause of action occurs.” §
95.031(1), Fla. Stat. (2005).
The majority acknowledges that the cause of action accrues when the
last element constituting the cause of action occurs, but must assume
that the breach itself is always the last element triggering the statute of
limitations. While acknowledging that language found in treatises and
cases support this view, I wonder whether the treatises and cases have
ever really addressed the issue or rather have simply fallen back on
repeating language found in prior decisions where the issue has never
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been squarely met.
Section 95.11(2)(b), Florida Statutes (2003) provides that “[a] legal or
equitable action on a contract, obligation, or liability founded on a
written instrument” must be commenced within five years. “[A] cause of
action cannot be said to have accrued, within the meaning of the statute
of limitations, until the action may be brought.” Lee, 678 So. 2d at 821
(citing Loewer v. N.Y. Life Ins. Co., 773 F. Supp. 1518, 1521 (M.D. Fla.
1991)). The elements for bringing a cause of action for breach of contract
are: (1) a valid contract; (2) material breach; and (3) damages. J.J.
Gumberg Co. v. Janis Servs., Inc., 847 So. 2d 1048, 1049 (Fla. 4th DCA
2003).
The real issue in this case is when did plaintiff's cause of action
accrue? In this case, the last element giving rise to the cause of action
was the damages that arose from the grounding of the plane. Had the
airplane never been grounded, the plaintiff would not have sustained
damage. Thus, the actual breach, the defendant's failure to have
certification at the time it inspected and repaired the aircraft, could not
be the accrual date for the cause of action.
I would therefore reverse and remand the case to the trial court for
reinstatement of the plaintiff's second amended complaint.
*
*
*
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm
Beach County; Thomas H. Barkdull, III, Judge; L.T. Case No. 50-2003CA-009217-XXCDAJ.
Barbara J. Riesberg of Roth, Rousso, Katsman & Schneider, L.L.P.,
Aventura, for appellant.
John M. Murray, Michael G. Shannon and Christopher E. Doran of
Murray, Marin & Herman, P.A., Coral Gables, for appellee.
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